What Is Small Group Health Insurance?

December 15, 2020

We’ve all heard of health insurance. While many Americans have some kind of coverage, there are millions more without it. Having health insurance provides peace of mind that more affordable care is near when needed. As an employer, offering your employees such protection a desirable feature for job-seekers. However, like many other aspects of owning a company, insurance is an added expense. Small group health insurance is a means for small companies, often working on tight budgets, to provide their employees with the protection they deserve.


The premiums

One of the highest costs within health insurance involves the premium. A premium is a price that one pays for coverage. This price is based upon various factors but generally boils down to the risk taken on by the insurance company.

For example, an individual health plan for a young adult in their early thirties in overall health will be much cheaper than the same plan carried by an older individual in his or her seventies with past medical histories. The latter is considered a higher risk to the insurance company and will pay a higher premium.

However, when it concerns small group health insurance, the risk is spread across a group of individuals versus just one. In turn, this type of coverage is generally the more affordable option. Furthermore, as an employer, only a fraction of the overall premium is taken on. With small group insurance, the premium is divided among the employer and employee.


The advantages

Beyond spreading the risk and reducing the overall premium, small group insurance offers additional benefits, such ase HMOs and PPOs, which now come into play.



An HMO is a plan that offers a local network of providers and hospitals for the insured to choose from. With lower monthly premiums, HMOs require the insured to select a primary care provider (PCP) and stay within the network; referrals are needed.



On the other end is PPO. This type of plan comes with a higher premium but offers more flexibility to the insured. With no required PCP designation, the need for referrals is also eliminated. Furthermore, out of network coverage is still available, but at an even higher cost.


Group health insurance is a sensible choice for business. While the employees pay premiums with before-tax dollars, employers also benefit. Premiums allow a business to pay lower payroll taxes, which are often deductible expenses at year’s end.


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If you’re a small business owner looking for ways to provide for your employees, it’s time to give small group health insurance some thought. Not only will you become a more desirable place to work, but your overall insurance costs will drop.

For more information, contact Brownell Insurance today by calling (603) 437-1992. For decades, we’ve helped local small businesses achieve the protection they need through sensible, budget-friendly means.